LINKBANCORP, Inc. Announces First Quarter 2023 Financial Results
HARRISBURG, Pa., May 1, 2023 /PRNewswire/ -- LINKBANCORP, Inc. (NASDAQ: LNKB) (the "Company"), the parent company of LINKBANK (the "Bank") reported a net loss of $1.55 million, or $0.10 per diluted share, for the quarter ended March 31, 2023. Excluding merger related expenses and a net loss on sale of securities, adjusted earnings were $783 thousand1, or $0.051 per diluted share for the first quarter of 2023.
First Quarter 2023 Highlights
Stable and Growing Deposit Portfolio. Total deposits grew $37.7 million, or 16% annualized over the prior quarter end, including an increase in noninterest bearing deposits of $11.7 million, or 25% annualized, and $26.0 million in interest bearing deposits, or 14% annualized. Estimated uninsured deposits, excluding collateralized public funds and affiliate company accounts, totaled $387.8 million, or 39.4% of total deposits as of March 31, 2023.
Strong Liquidity Position. The Company enhanced its on-balance sheet liquidity, with cash and cash equivalents as of March 31, 2023 of $51.7 million, up from $30.0 million at December 31, 2022. Total liquidity, including all available borrowing capacity and brokered deposit availability, together with cash and cash equivalents and unpledged investment securities, totaled $511.0 million as of March 31, 2023.
Solid Commercial Loan Growth. Total loans grew $17.5 million during the first quarter, representing a 7.7% annualized growth rate, driven primarily by commercial loan activity.
Funding Costs Drive Decline in Net Interest Income. Net interest income for the first quarter of 2023 was $8.0 million, compared to $9.0 million in the fourth quarter of 2022 and $7.5 million in the prior year first quarter. Net interest margin was 2.95% for the first quarter of 2023 compared to 3.36% for the fourth quarter of 2022. The linked quarter decrease was primarily due to higher interest expense on deposits outpacing the increase in interest income from loans.
Loss on Securities. The Company recognized a $2.37 million loss on the sale of subordinated notes issued by Signature Bank, which was closed by its regulator in March 2023.
Transformational Merger. On February 22, 2023, the Company entered into a definitive agreement with Partners Bancorp ("Partners"), the parent company of The Bank of Delmarva and Virginia Partners Bank, under which the companies will combine in an all-stock combination, valued at approximately $169.1 million, based on the Company's 10-day volume weighted average price of $8.08 as of February 21, 2023, the day prior to the merger announcement. When the transaction is completed, the combined organization will be a leading Mid-Atlantic community banking franchise with nearly $3 billion in assets. In connection with the transaction, the Company enhanced its strong capital position, completing a private placement common stock offering resulting in $10 million in gross proceeds, and contributing $5 million of such proceeds to the Bank as additional capital.
CECL Adoption. On January 1, 2023, the Company adopted ASU 2016-13, which replaced the former "incurred loss" model for recognizing credit losses with an "expected loss" model (commonly referred to as "CECL"). The impact of the adoption included increases to the allowance for credit losses of $5.7 million related to loans, $900 thousand related to unfunded commitments and $600 thousand related to held-to-maturity securities, resulting in a decrease in retained earnings, net of tax effect, of approximately $5.4 million. For purposes of regulatory capital calculations, an election was made to phase-in the day one impact on retained earnings over three years.
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1 See Appendix A — Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP measure. |
"We are pleased that in the midst of this unprecedented interest rate environment and industry disruption, we continue to grow both quality loans and core deposits, even as our results for the quarter clearly reflect the unique challenges of this period," said Andrew Samuel, Chief Executive Officer. "With our liquidity and capital positions, as well as continued strength in credit quality, we are very well positioned to successfully navigate this period, focused on growing lower cost deposits to counteract funding expense and continuing to grow loans and positively impact our communities."
Income Statement
Net interest income before the provision for credit losses for the first quarter of 2023 decreased to $8.0 million compared to $9.0 million in the fourth quarter of 2022. Net interest margin was 2.95% for the first quarter of 2023 compared to 3.36% for the fourth quarter of 2022. The decrease in net interest margin for the current quarter was due to the higher rate paid on interest-bearing liabilities, which outpaced the increase in the yield on interest earning assets. The overall rate and yield increases were driven by the multiple federal funds rate increases that occurred over the preceding twelve months, coupled with competition for deposits in the market. During the first quarter, the cost of funds increased 72 basis points as compared to the linked quarter which was partially offset by a 25 basis points increase in the average yield on interest-earning assets. The increase in the average yield on interest-earning assets was primarily due to the increase of the average yield on loans of 19 basis points to 5.09% during the first quarter of 2023.
During the first quarter, the Company was able to introduce the improved functionality of its new core technology platform, including enhanced cash management features. The Company has begun to see the fruits of these investments, as well as an increased internal focus and strategy on core deposit generation. For example, during the first quarter, 547 new checking accounts were opened for a total of $34 million in new deposits. Additionally, initiatives focused on professional services firms such as title companies, law firms, and property management companies, resulted in 96 new accounts being opened during the quarter, which are anticipated to fund over the course of the second quarter. Given these recent positive trends in acquiring lower cost core deposits, the Company anticipates its net interest margin will begin to stabilize as higher cost brokered deposits are allowed to mature and roll off, replaced by core accounts.
Noninterest income decreased from $508 thousand in the fourth quarter of 2022 to a loss of $1.9 million in the first quarter of 2023, primarily related to a recognized loss upon the sale of subordinated notes. Excluding the securities loss, noninterest income was relatively flat compared to the linked quarter.
Noninterest expense for the first quarter of 2023 decreased to $7.7 million compared to $8.4 million for the fourth quarter of 2022. This included a decrease in merger and system conversion related expenses from $973 thousand in the fourth quarter of 2022 to $587 thousand in the first quarter of 2023. In addition, salaries and employee benefits decreased from $4.6 million in the fourth quarter of 2022 to $4.1 million in the first quarter of 2023, largely attributable to performance-based bonuses recognized during the fourth quarter of 2022.
Balance Sheet
Total assets were $1.214 billion at March 31, 2023 compared to $1.164 billion at December 31, 2022 and $1.036 billion at March 31, 2022. Deposits and net loans as of March 31, 2023 totaled $984.5 million and $934.8 million, respectively, compared to deposits and net loans of $946.8 million and $923.2 million, respectively, at December 31, 2022 and $862.2 million and $727.6 million, respectively, at March 31, 2022.
Total loans increased $17.5 million from December 31, 2022 to March 31, 2023, or 7.7% annualized, with the average commercial loan size during the first quarter of 2023 totaling approximately $830,000.
In response to industry disruption, the Company proactively took steps during the quarter to enhance its on-balance sheet liquidity. Cash and cash equivalents increased to $51.7 million at March 31, 2023 from $30.0 million at December 31, 2022, representing a 72.4% increase. In addition to growth in core deposits, this position was supported by an additional $10 million in fixed-rate FHLB advances.
Deposits at March 31, 2023 totaled $984.5 million, representing a 16.2% annualized increase from December 31, 2022 which was driven by growth in interest and noninterest bearing deposits over the quarter. Noninterest bearing deposits increased from $192.8 million at December 31, 2022 to $204.5 million at March 31, 2023, representing a 24.7% annualized increase.
Shareholders' equity increased from $138.6 million at December 31, 2022 to $141.6 million at March 31, 2023. The increase included the impact of $10 million in proceeds from the February 2023 private placement, offset by a decrease in retained earnings due to the first quarter net loss, dividends paid of $1.2 million and the cumulative-effect adjustment from the adoption of CECL that decreased retained earnings by $5.4 million. Other comprehensive loss decreased by $1.2 million as a result of decreased unrealized losses on available-for-sale securities due to changes in the interest rate environment.
Asset Quality
In the first quarter of 2023, the Company recorded a provision for credit losses, calculated under the CECL model, of $293 thousand, compared to $100 thousand for the fourth quarter of 2022 under the incurred loss model. The provision expense was primarily due to loan growth and changes to the macroeconomic outlook.
Asset quality metrics remain strong. As of March 31, 2023, the Company's non-performing assets were $2.4 million, representing 0.20% of total assets. Non-performing assets at March 31, 2023 excluded purchased with credit deterioration ("PCD") loans with a balance of $2.5 million.
The allowance for credit losses was $10.5 million, or 1.11% of total loans at March 31, 2023, compared to the allowance for loan losses of 0.50% of total loans at December 31, 2022. The allowance for credit losses to nonperforming assets was 438.95% at March 31, 2023, compared to 186.64% at December 31, 2022.
Capital
The Bank's regulatory capital ratios are well in excess of regulatory minimums to be considered "well capitalized" as of March 31, 2023. The Bank's Total Capital Ratio and Tier 1 Capital Ratio increased to 13.53% and 12.32%, respectively, at March 31, 2023 from 12.89% and 12.41%, respectively, at December 31, 2022. The Company's ratio of Tangible Common Equity to Tangible Assets was 8.90%2 at March 31, 2023.
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2 See Appendix A — Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP measure. |
ABOUT LINKBANCORP, Inc.
LINKBANCORP, Inc. was formed in 2018 with a mission to positively impact lives through community banking. Its subsidiary bank, LINKBANK, is a Pennsylvania state-chartered bank serving individuals, families, nonprofits and business clients throughout Central and Southeastern Pennsylvania through 10 client solutions centers and www.linkbank.com. LINKBANCORP, Inc. common stock is traded on the Nasdaq Capital Market under the symbol "LNKB". For further company information, visit ir.linkbancorp.com.
Forward Looking Statements
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of current or historical fact and involve substantial risks and uncertainties. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "projects," "may," "will," "should," and other similar expressions can be used to identify forward-looking statements. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. Among the risks and uncertainties that could cause actual results to differ from those described in the forward-looking statements include, but are not limited to the following: costs or difficulties associated with newly developed or acquired operations; risks related to the proposed merger with Partners; changes in general economic trends, including inflation and changes in interest rates; increased competition; changes in consumer demand for financial services; our ability to control costs and expenses; adverse developments in borrower industries and, in particular, declines in real estate values; changes in and compliance with federal and state laws that regulate our business and capital levels; our ability to raise capital as needed; and the effects of the COVID-19 pandemic and actions taken by governments, businesses and individuals in response. The Company does not undertake, and specifically disclaims, any obligation to publicly revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law. Accordingly, you should not place undue reliance on forward-looking statements.
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LINKBANCORP, Inc. and Subsidiaries | ||||||||||
Consolidated Balance Sheet (Unaudited) | ||||||||||
March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | ||||||
(In Thousands, except share and per share data) | ||||||||||
ASSETS | ||||||||||
Noninterest-bearing cash equivalents | $ 4,545 | $ 4,209 | $ 8,711 | $ 7,563 | $ 6,425 | |||||
Interest-bearing deposits with other institutions | 47,190 | 25,802 | 66,085 | 55,433 | 102,704 | |||||
Cash and cash equivalents | $ 51,735 | $ 30,011 | $ 74,796 | $ 62,996 | $ 109,129 | |||||
Certificates of deposit with other banks | 745 | 5,623 | 8,358 | 11,088 | 12,828 | |||||
Securities available for sale, at fair value | 86,804 | 78,813 | 78,698 | 85,756 | 93,202 | |||||
Securities held to maturity, net of allowance for credit losses | 38,986 | 31,822 | 32,571 | 28,816 | 5,000 | |||||
Loans held for sale | — | — | — | — | 4,074 | |||||
Loans receivable, gross | 945,371 | 927,871 | 863,969 | 790,406 | 731,061 | |||||
Allowance for credit losses - loans | (10,526) | (4,666) | (4,569) | (3,890) | (3,443) | |||||
Loans receivable, net | 934,845 | 923,205 | 859,400 | 786,516 | 727,618 | |||||
Investments in restricted bank stock | 4,134 | 3,377 | 3,327 | 2,567 | 3,612 | |||||
Premises and equipment, net | 6,497 | 6,743 | 9,087 | 7,915 | 5,253 | |||||
Right-of-Use Asset – Premises | 10,058 | 10,219 | 8,920 | 4,513 | 4,605 | |||||
Bank-owned life insurance | 24,384 | 19,244 | 19,127 | 19,012 | 18,898 | |||||
Goodwill and other intangible assets | 36,833 | 36,894 | 36,955 | 37,020 | 37,085 | |||||
Deferred tax asset | 6,749 | 5,619 | 6,378 | 5,777 | 5,092 | |||||
Accrued interest receivable and other assets | 12,188 | 12,084 | 7,256 | 7,909 | 9,280 | |||||
TOTAL ASSETS | $ 1,213,958 | $ 1,163,654 | $ 1,144,873 | $ 1,059,885 | $ 1,035,676 | |||||
LIABILITIES | ||||||||||
Deposits: | ||||||||||
Demand, noninterest bearing | $ 204,495 | $ 192,773 | $ 184,857 | $ 184,345 | $ 165,228 | |||||
Interest bearing | 780,003 | 753,999 | 766,853 | 718,028 | 696,942 | |||||
Total deposits | 984,498 | 946,772 | 951,710 | 902,373 | 862,170 | |||||
Other Borrowings | 31,250 | 20,938 | — | 1,639 | 36,117 | |||||
Subordinated Debt | 40,441 | 40,484 | 40,526 | 40,585 | 20,653 | |||||
Operating Lease Liabilities | 10,058 | 10,219 | 8,921 | 4,513 | 4,606 | |||||
Accrued interest payable and other liabilities | 6,130 | 6,688 | 6,774 | 6,004 | 5,790 | |||||
TOTAL LIABILITIES | 1,072,377 | 1,025,101 | 1,007,931 | 955,114 | 929,336 | |||||
SHAREHOLDERS' EQUITY | ||||||||||
Preferred stock | — | — | — | — | — | |||||
Common stock | 250 | 149 | 149 | 99 | 99 | |||||
Surplus | 127,659 | 117,709 | 117,698 | 83,070 | 82,930 | |||||
Retained earnings | 18,911 | 27,100 | 27,525 | 26,491 | 25,623 | |||||
Accumulated other comprehensive (loss) income | (5,239) | (6,405) | (8,430) | (4,889) | (2,312) | |||||
TOTAL SHAREHOLDERS' EQUITY | 141,581 | 138,553 | 136,942 | 104,771 | 106,340 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 1,213,958 | $ 1,163,654 | $ 1,144,873 | $ 1,059,885 | $ 1,035,676 | |||||
Common shares outstanding | 16,221,692 | 14,939,640 | 14,939,640 | 9,838,435 | 9,826,435 | |||||
LINKBANCORP, Inc. and Subsidiaries | ||||||
Consolidated Statements of Operations (Unaudited) | ||||||
Three Months Ended | ||||||
3/31/2023 | 12/31/2022 | 3/31/2022 | ||||
(In Thousands, except share and per share data) | ||||||
INTEREST AND DIVIDEND INCOME | ||||||
Loans receivable, including fees | $ 11,762 | $ 11,109 | $ 7,763 | |||
Other | 1,228 | 1,097 | 619 | |||
Total interest and dividend income | 12,990 | 12,206 | 8,382 | |||
INTEREST EXPENSE | ||||||
Deposits | 4,517 | 2,465 | 665 | |||
Other Borrowings | 87 | 335 | 33 | |||
Subordinated Debt | 432 | 421 | 207 | |||
Total interest expense | 5,036 | 3,221 | 905 | |||
NET INTEREST INCOME BEFORE PROVISION FOR | 7,954 | 8,985 | 7,477 | |||
Provision for credit losses | 293 | 100 | 280 | |||
NET INTEREST INCOME AFTER PROVISION FOR | 7,661 | 8,885 | 7,197 | |||
NONINTEREST INCOME | ||||||
Service charges on deposit accounts | 199 | 188 | 210 | |||
Bank-owned life insurance | 140 | 116 | 110 | |||
Net realized (losses) gains on the sale of debt securities | (2,370) | — | 13 | |||
Gain on sale of loans | — | — | 180 | |||
Other | 178 | 204 | 198 | |||
Total noninterest income | (1,853) | 508 | 711 | |||
NONINTEREST EXPENSE | ||||||
Salaries and employee benefits | 4,120 | 4,612 | 3,656 | |||
Occupancy | 707 | 616 | 281 | |||
Equipment and data processing | 693 | 857 | 698 | |||
Professional fees | 381 | 371 | 228 | |||
FDIC insurance | 159 | 157 | 204 | |||
Bank Shares Tax | 278 | 201 | 183 | |||
Merger & system conversion related expenses | 587 | 973 | — | |||
Other | 812 | 658 | 848 | |||
Total noninterest expense | 7,737 | 8,445 | 6,098 | |||
(Loss) income before income tax (benefit) expense | (1,929) | 948 | 1,810 | |||
Income tax (benefit) expense | (376) | 252 | 286 | |||
NET (LOSS) INCOME | $ (1,553) | $ 696 | $ 1,524 | |||
(LOSS) EARNINGS PER SHARE, BASIC | $ (0.10) | $ 0.05 | $ 0.16 | |||
(LOSS) EARNINGS PER SHARE, DILUTED | $ (0.10) | $ 0.05 | $ 0.15 | |||
WEIGHTED-AVERAGE COMMON SHARES | ||||||
BASIC | 15,480,951 | 14,939,640 | 9,826,435 | |||
DILUTED | 15,480,951 | 14,939,640 | 10,053,684 | |||
LINKBANCORP, Inc. and Subsidiaries | |||||||||
Financial Highlights (Unaudited) | |||||||||
For the Three Months Ended | |||||||||
('Dollars In Thousands) | 3/31/2023 | 12/31/2022 | 3/31/2022 | ||||||
Operating Highlights | |||||||||
Net Income | $ (1,553) | $ 696 | $ 1,524 | ||||||
Net Interest Income | 7,954 | 8,985 | 7,477 | ||||||
Provision for Credit Losses | 293 | 100 | 280 | ||||||
Non-Interest Income | (1,853) | 508 | 711 | ||||||
Non-Interest Expense | 7,737 | 8,445 | 6,098 | ||||||
Earnings per Share, Basic | (0.10) | 0.05 | 0.16 | ||||||
Adjusted Earnings per Share, Basic (2) | 0.05 | 0.10 | 0.15 | ||||||
Earnings per Share, Diluted | (0.10) | 0.05 | 0.15 | ||||||
Adjusted Earnings per Share, Diluted (2) | 0.05 | 0.10 | 0.15 | ||||||
Selected Operating Ratios | |||||||||
Net Interest Margin | 2.95 % | 3.36 % | 3.40 % | ||||||
Annualized Return on Assets ("ROA") | -0.52 % | 0.24 % | 0.63 % | ||||||
Adjusted ROA2 | 0.27 % | 0.50 % | 0.63 % | ||||||
Annualized Return on Equity ("ROE") | -4.56 % | 2.02 % | 5.72 % | ||||||
Adjusted ROE2 | 2.30 % | 4.24 % | 5.69 % | ||||||
Efficiency Ratio | 126.82 % | 88.96 % | 74.47 % | ||||||
Adjusted Efficiency Ratio3 | 84.41 % | 78.71 % | 74.59 % | ||||||
Noninterest Income to Avg. Assets | -0.63 % | 0.17 % | 0.30 % | ||||||
Noninterest Expense to Avg. Assets | 2.65 % | 2.90 % | 2.53 % | ||||||
3/31/2023 | 12/31/2022 | 9/30/2022 | 6/30/2022 | 3/31/2022 | |||||
Financial Condition Data | |||||||||
Total Assets | $ 1,213,958 | $ 1,163,654 | $ 1,144,873 | $ 1,059,885 | $ 1,035,676 | ||||
Loans Receivable, Net | 934,845 | 923,205 | 859,400 | 786,516 | 727,618 | ||||
Noninterest-bearing Deposits | 204,495 | 192,773 | 184,857 | 184,345 | 165,228 | ||||
Interst-bearing Deposits | 780,003 | 753,999 | 766,853 | 718,028 | 696,942 | ||||
Total Deposits | 984,498 | 946,772 | 951,710 | 902,373 | 862,170 | ||||
Selected Balance Sheet Ratios | |||||||||
Total Capital Ratio1 | 13.53 % | 12.89 % | 11.55 % | 12.42 % | 11.14 % | ||||
Tier 1 Capital Ratio1 | 12.32 % | 12.41 % | 11.04 % | 11.94 % | 10.67 % | ||||
Common Equity Tier 1 Capital Ratio1 | 12.32 % | 12.41 % | 11.04 % | 11.94 % | 10.67 % | ||||
Leverage Ratio1 | 10.78 % | 10.93 % | 9.74 % | 10.10 % | 8.71 % | ||||
Tangible Common Equity to Tangible Assets4 | 8.90 % | 9.02 % | 9.02 % | 6.62 % | 6.94 % | ||||
Tangible Book Value per Share5 | $ 6.46 | $ 6.80 | $ 6.69 | $ 6.89 | $ 7.05 | ||||
Asset Quality Data | |||||||||
Non-performing Assets | $ 2,398 | $ 2,500 | $ 1,979 | $ 1,494 | $ 1,246 | ||||
Non-performing Assets to Total Assets | 0.20 % | 0.21 % | 0.17 % | 0.14 % | 0.12 % | ||||
Non-performing Loans to Total Loans | 0.25 % | 0.27 % | 0.23 % | 0.19 % | 0.17 % | ||||
Allowance for Credit Losses ("ACL") | $ 10,526 | $ 4,666 | $ 4,569 | $ 3,890 | $ 3,443 | ||||
ACL to Total Loans | 1.11 % | 0.50 % | 0.53 % | 0.49 % | 0.47 % | ||||
ACL to Nonperforming Assets | 438.95 % | 186.64 % | 230.87 % | 260.37 % | 276.32 % | ||||
(1) - These capital ratios have been calculated using bank-level capital | |||||||||
(2) - This is a non-GAAP financial measure. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP | |||||||||
(3) - The efficiency ratio, as adjusted represents noninterst expense divided by the sum of net interest income and noninterest income, excluding | |||||||||
(4) - We calculate tangible common equity as total shareholders' equity less goodwill and other intangibles, and we calculate tangible assets as total | |||||||||
(5) - We calculate tangible book value per common share as total shareholders' equity less goodwill and other intangibles, divided by the | |||||||||
LINKBANCORP, Inc. and Subsidiaries | ||||||||||||
Net Interst Margin - Quarter-To-Date (Unaudited) | ||||||||||||
For the Three Months Ended March 31, | ||||||||||||
2023 | 2022 | |||||||||||
(Dollars in thousands) | Avg Bal | Interest (2) | Yield/Rate | Avg Bal | Interest (2) | Yield/Rate | ||||||
Int. Earn. Cash | $ 36,470 | $ 275 | 3.06 % | $ 59,735 | $ 53 | 0.36 % | ||||||
Securities | ||||||||||||
Taxable (1) | 81,899 | 653 | 3.23 % | 67,681 | 258 | 1.55 % | ||||||
Tax-Exempt | 38,368 | 377 | 3.98 % | 45,030 | 390 | 3.51 % | ||||||
Total Securities | 120,267 | 1,030 | 3.47 % | 112,711 | 648 | 2.33 % | ||||||
Total Cash Equiv. and Investments | 156,737 | 1,305 | 3.38 % | 172,446 | 701 | 1.65 % | ||||||
Total Loans (3) | 936,510 | 11,762 | 5.09 % | 718,987 | 7,763 | 4.38 % | ||||||
Total Earning Assets | 1,093,247 | 13,067 | 4.85 % | 891,433 | 8,464 | 3.85 % | ||||||
Other Assets | 90,938 | 85,852 | ||||||||||
Total Assets | $ 1,184,185 | $ 977,285 | ||||||||||
Interest bearing demand | $ 251,103 | $ 1,188 | 1.92 % | $ 258,140 | $ 245 | 0.38 % | ||||||
Money market demand | 245,563 | 1,350 | 2.23 % | 215,410 | 139 | 0.26 % | ||||||
Time deposits | 290,605 | 1,979 | 2.76 % | 194,897 | 281 | 0.58 % | ||||||
Total Borrowings | 49,246 | 519 | 4.27 % | 57,965 | 240 | 1.68 % | ||||||
Total Interest-Bearing Liabilities | 836,517 | 5,036 | 2.44 % | 726,412 | 905 | 0.51 % | ||||||
Non Int Bearing Deposits | 192,135 | 131,841 | ||||||||||
Total Cost of Funds | $ 1,028,652 | $ 5,036 | 1.99 % | $ 858,253 | $ 905 | 0.43 % | ||||||
Other Liabilities | 17,508 | 11,035 | ||||||||||
Total Liabilities | $ 1,046,160 | $ 869,288 | ||||||||||
Shareholders' Equity | $ 138,025 | $ 107,997 | ||||||||||
Total Liabilities & Shareholders' Equity | $ 1,184,185 | $ 977,285 | ||||||||||
Net Interest Income/Spread (FTE) | 8,031 | 2.41 % | 7,559 | 3.34 % | ||||||||
Tax-Equivalent Basis Adjustment | (77) | (82) | ||||||||||
Net Interest Income | $ 7,954 | $ 7,477 | ||||||||||
Net Interest Margin | 2.95 % | 3.40 % | ||||||||||
(1) Taxable income on securities includes income from available for sale securities and income from certificates of deposits with other banks. | ||||||||||||
(2) Income stated on a tax equivalent basis which is a non-GAAP measure and reconciled to GAAP at the bottom of the table | ||||||||||||
(3) Includes the balances of nonaccrual loans | ||||||||||||
LINKBANCORP, Inc. and Subsidiaries | ||||||||||||
Net Interst Margin - Linked Quarter-To-Date (Unaudited) | ||||||||||||
For the Three Months Ended | ||||||||||||
March 31, 2023 | December 31, 2022 | |||||||||||
(Dollars in thousands) | Avg Bal | Interest (2) | Yield/Rate | Avg Bal | Interest (2) | Yield/Rate | ||||||
Int. Earn. Cash | $ 36,470 | $ 275 | 3.06 % | $ 42,925 | $ 227 | 2.10 % | ||||||
Securities | ||||||||||||
Taxable (1) | 81,899 | 653 | 3.23 % | 80,842 | 567 | 2.78 % | ||||||
Tax-Exempt | 38,368 | 377 | 3.98 % | 37,169 | 384 | 4.10 % | ||||||
Total Securities | 120,267 | 1,030 | 3.47 % | 118,011 | 951 | 3.20 % | ||||||
Total Cash Equiv. and Investments | 156,737 | 1,305 | 3.38 % | 160,936 | 1,178 | 2.90 % | ||||||
Total Loans (3) | 936,510 | 11,762 | 5.09 % | 899,028 | 11,109 | 4.90 % | ||||||
Total Earning Assets | 1,093,247 | 13,067 | 4.85 % | 1,059,964 | 12,287 | 4.60 % | ||||||
Other Assets | 90,938 | 94,628 | ||||||||||
Total Assets | $ 1,184,185 | $ 1,154,592 | ||||||||||
Interest bearing demand | $ 251,103 | $ 1,188 | 1.92 % | $ 278,816 | $ 808 | 1.15 % | ||||||
Money market demand | 245,563 | 1,350 | 2.23 % | 245,154 | 966 | 1.56 % | ||||||
Time deposits | 290,605 | 1,979 | 2.76 % | 211,090 | 691 | 1.30 % | ||||||
Total Borrowings | 49,246 | 519 | 4.27 % | 68,160 | 756 | 4.40 % | ||||||
Total Interest-Bearing Liabilities | 836,517 | 5,036 | 2.44 % | 803,220 | 3,221 | 1.59 % | ||||||
Non Int Bearing Deposits | 192,135 | 199,556 | ||||||||||
Total Cost of Funds | $ 1,028,652 | $ 5,036 | 1.99 % | $ 1,002,776 | $ 3,221 | 1.27 % | ||||||
Other Liabilities | 17,508 | 14,864 | ||||||||||
Total Liabilities | $ 1,046,160 | $ 1,017,640 | ||||||||||
Shareholders' Equity | $ 138,025 | $ 136,952 | ||||||||||
Total Liabilities & Shareholders' Equity | $ 1,184,185 | $ 1,154,592 | ||||||||||
Net Interest Income/Spread (FTE) | 8,031 | 2.41 % | 9,066 | 3.01 % | ||||||||
Tax-Equivalent Basis Adjustment | (77) | (81) | ||||||||||
Net Interest Income | $ 7,954 | $ 8,985 | ||||||||||
Net Interest Margin | 2.95 % | 3.36 % | ||||||||||
(1) Taxable income on securities includes income from available for sale securities and income from certificates of deposits with other banks. | ||||||||||||
(2) Income stated on a tax equivalent basis which is a non-GAAP measure and reconciled to GAAP at the bottom of the table | ||||||||||||
(3) Includes the balances of nonaccrual loans | ||||||||||||
LINKBANCORP, Inc. and Subsidiaries | ||||||||||
Loans Receivable Detail (Unaudited) | ||||||||||
(In Thousands) | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | |||||
Agriculture loans | $ 16,274 | $ 15,591 | $ 13,977 | $ 7,710 | $ 8,111 | |||||
Commercial loans | 98,544 | 103,874 | 97,542 | 88,452 | 94,114 | |||||
Paycheck Protection Program ("PPP") loans | 811 | 881 | 933 | 2,527 | 10,586 | |||||
Commercial real estate loans | 569,972 | 540,914 | 482,367 | 435,588 | 353,559 | |||||
Residential real estate loans | 244,694 | 250,832 | 251,832 | 241,401 | 252,158 | |||||
Consumer and other loans | 10,472 | 10,057 | 11,929 | 8,689 | 6,359 | |||||
Municipal loans | 4,292 | 5,466 | 5,404 | 5,814 | 6,193 | |||||
945,059 | 927,615 | 863,984 | 790,181 | 731,080 | ||||||
Deferred costs (fees) | 312 | 256 | (15) | 225 | (19) | |||||
Total loans receivable | $ 945,371 | $ 927,871 | $ 863,969 | $ 790,406 | $ 731,061 | |||||
LINKBANCORP, Inc. and Subsidiaries | ||||||
Investments in Securities Detail (Unaudited) | ||||||
March 31, 2023 | ||||||
(In Thousands) | Amortized | Net | Fair | |||
Available for Sale: | ||||||
U.S. government agency securities | $ 2,000 | $ 4 | $ 2,004 | |||
Small Business Administration loan pools | 783 | (15) | 768 | |||
Obligations of state and political subdivisions | 45,691 | (3,236) | 42,455 | |||
Mortgage-backed securities in government-sponsored entities | 44,960 | (3,383) | 41,577 | |||
$ 93,434 | $ (6,630) | $ 86,804 | ||||
Amortized | Net | Fair | ||||
Held to Maturity: | ||||||
Corporate debentures | $ 15,000 | $ (1,031) | $ 13,969 | |||
Structured mortgage-backed securities | 24,519 | (637) | 23,882 | |||
$ 39,519 | $ (1,668) | $ 37,851 | ||||
December 31, 2022 | ||||||
(In Thousands) | Amortized | Net | Fair | |||
Available for Sale: | ||||||
Small Business Administration loan pools | $ 858 | $ (15) | $ 843 | |||
Obligations of state and political subdivisions | 44,189 | (4,020) | 40,169 | |||
Mortgage-backed securities in government-sponsored entities | 41,873 | (4,072) | 37,801 | |||
$ 86,920 | $ (8,107) | $ 78,813 | ||||
Held to Maturity: | ||||||
Corporate debentures | $ 14,993 | $ (994) | $ 13,999 | |||
Structured mortgage-backed securities | 16,829 | (748) | 16,081 | |||
$ 31,822 | $ (1,742) | $ 30,080 | ||||
LINKBANCORP, Inc. and Subsidiaries | ||||||||||
Deposits Detail (Unaudited) | ||||||||||
(In Thousands) | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | |||||
Demand, noninterest-bearing | $ 204,495 | $ 192,773 | $ 184,857 | $ 184,345 | $ 165,228 | |||||
Demand, interest-bearing | 250,944 | 254,478 | 305,934 | 269,493 | 269,222 | |||||
Money market and savings | 241,858 | 228,048 | 266,743 | 235,411 | 224,673 | |||||
Time deposits, $250 and over | 51,855 | 46,116 | 39,123 | 55,507 | 55,514 | |||||
Time deposits, other | 235,346 | 225,357 | 155,053 | 157,617 | 147,533 | |||||
$ 984,498 | $ 946,772 | $ 951,710 | $ 902,373 | $ 862,170 | ||||||
Average Deposits Detail, for the Three Months Ended (Unaudited) | ||||||||||
(In Thousands) | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | |||||
Demand, noninterest-bearing | $ 192,135 | $ 199,556 | $ 170,863 | $ 152,691 | $ 131,841 | |||||
Demand, interest-bearing | 251,103 | 278,816 | 278,637 | 270,844 | 258,140 | |||||
Money market and savings | 245,563 | 245,154 | 244,107 | 224,483 | 215,410 | |||||
Time deposits | 290,605 | 211,090 | 205,792 | 211,033 | 194,897 | |||||
$ 979,406 | $ 934,616 | $ 899,399 | $ 859,051 | $ 800,288 | ||||||
Appendix A – Reconciliation to Non-GAAP Financial Measures
This document contains supplemental financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Management uses these non-GAAP measures in its analysis of the Company's performance. These measures should not be considered a substitute for GAAP basis measures nor should they be viewed as a substitute for operating results determined in accordance with GAAP. Management believes the presentation of non-GAAP financial measures that exclude the impact of specified items provide useful supplemental information that is essential to a proper understanding of the Company's financial condition and results. Non-GAAP measures are not formally defined under GAAP, and other entities may use calculation methods that differ from those used by us. As a complement to GAAP financial measures, our management believes these non-GAAP financial measures assist investors in comparing the financial condition and results of operations of financial institutions due to the industry prevalence of such non-GAAP measures. See the tables below for a reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures.
Adjusted Return on Average Assets | |||||
For the Three Months Ended | |||||
(Dollars in thousands) | 3/31/2023 | 12/31/2022 | 3/31/2022 | ||
Net (loss) income | $ (1,553) | $ 696 | $ 1,524 | ||
Average assets | 1,184,185 | 1,154,592 | 977,285 | ||
Return on average assets (annualized) | -0.53 % | 0.24 % | 0.63 % | ||
Net (loss) income | (1,553) | 696 | 1,524 | ||
Net losses (gains) on sale of securities | 2,370 | - | (13) | ||
Tax effect at 21% | (498) | - | 3 | ||
Merger & system conversion related expenses | 587 | 973 | - | ||
Tax effect at 21% | (123) | (204) | - | ||
Adjusted Net Income (Non-GAAP) | 783 | 1,465 | 1,514 | ||
Average assets | 1,184,185 | 1,154,592 | 977,285 | ||
Adjusted return on average assets (annualized) | 0.27 % | 0.50 % | 0.63 % | ||
Adjusted Return on Average Shareholders' Equity | |||||
For the Three Months Ended | |||||
(Dollars in thousands) | 3/31/2023 | 12/31/2022 | 3/31/2022 | ||
Net (loss) income | $ (1,553) | $ 696 | $ 1,524 | ||
Average shareholders' equity | 138,025 | 136,952 | 107,997 | ||
Return on average shareholders' equity (annualized) | -4.56 % | 2.02 % | 5.72 % | ||
Net (loss) income | (1,553) | 696 | 1,524 | ||
Net losses (gains) on sale of securities | 2,370 | - | (13) | ||
Tax effect at 21% | (498) | 3 | |||
Merger & system conversion related expenses | 587 | 973 | - | ||
Tax effect at 21% | (123) | (204) | - | ||
Adjusted Net Income (Non-GAAP) | 783 | 1,465 | 1,514 | ||
Average shareholders' equity | 138,025 | 136,952 | 107,997 | ||
Adjusted return on average shareholders' equity (annualized) | 2.30 % | 4.24 % | 5.69 % | ||
Adjusted Efficiency Ratio | |||||
For the Three Months Ended | |||||
(Dollars in thousands) | 3/31/2023 | 12/31/2022 | 3/31/2022 | ||
GAAP-based efficiency ratio | 126.82 % | 88.96 % | 74.47 % | ||
Net interest income | $ 7,954 | $ 8,985 | $ 7,477 | ||
Noninterest income | (1,853) | 508 | 711 | ||
Less: net (losses) gains on sales of securities | (2,370) | - | 13 | ||
Adjusted revenue (Non-GAAP) | 8,471 | 9,493 | 8,175 | ||
Total noninterest expense | 7,737 | 8,445 | 6,098 | ||
Less: Merger & system conversion related expenses | 587 | 973 | - | ||
Adjusted non-interest expense | 7,150 | 7,472 | 6,098 | ||
Efficiency ratio, as adjusted (Non-GAAP) | 84.41 % | 78.71 % | 74.59 % | ||
Adjusted Earnings Per Share | |||||
For the Three Months Ended | |||||
(Dollars in thousands, except per share data) | 3/31/2023 | 12/31/2022 | 3/31/2022 | ||
GAAP-Based (Loss) Earnings Per Share, Basic | $ (0.10) | $ 0.05 | $ 0.16 | ||
GAAP-Based (Loss) Earnings Per Share, Diluted | $ (0.10) | $ 0.05 | $ 0.15 | ||
Net (Loss) Income | $ (1,553) | $ 696 | $ 1,524 | ||
Net losses (gains) on sale of securities | 2,370 | - | (13) | ||
Tax effect at 21% | (498) | - | 3 | ||
Merger & system conversion related expenses | 587 | 973 | - | ||
Tax effect at 21% | (123) | (204) | - | ||
Adjusted Net Income (Non-GAAP) | 783 | 1,465 | 1,514 | ||
Adjusted Earnings per Share, Basic (Non-GAAP) | $ 0.05 | $ 0.10 | $ 0.15 | ||
Adjusted Earnings per Share, Diluted (Non-GAAP) | $ 0.05 | $ 0.10 | $ 0.15 | ||
Tangible Common Equity and Tangible Book Value | ||||||||||
3/31/2023 | 12/31/2022 | 9/30/2022 | 6/30/2022 | 3/31/2022 | ||||||
Tangible Common Equity | (Dollars in thousands, except for share data) | |||||||||
Total shareholders' equity | $ 141,581 | $ 138,553 | $ 136,942 | $ 104,771 | $ 106,340 | |||||
Adjustments: | ||||||||||
Goodwill | (35,842) | (35,842) | (35,842) | (35,842) | (35,842) | |||||
Other intangible assets | (991) | (1,052) | (1,113) | (1,178) | (1,243) | |||||
Tangible common equity (Non-GAAP) | $ 104,748 | $ 101,659 | $ 99,987 | $ 67,751 | $ 69,255 | |||||
Common shares outstanding | 16,221,692 | 14,939,640 | 14,939,640 | 9,838,435 | 9,826,435 | |||||
Book value per common share | $ 8.73 | $ 9.27 | $ 9.17 | $ 10.65 | $ 10.82 | |||||
Tangible book value per common share | $ 6.46 | $ 6.80 | $ 6.69 | $ 6.89 | $ 7.05 | |||||
Tangible Assets | ||||||||||
Total assets | $ 1,213,958 | $ 1,163,654 | $ 1,144,873 | $ 1,059,885 | $ 1,035,676 | |||||
Adjustments: | ||||||||||
Goodwill | (35,842) | (35,842) | (35,842) | (35,842) | (35,842) | |||||
Other intangible assets | (991) | (1,052) | (1,113) | (1,178) | (1,243) | |||||
Tangible assets (Non-GAAP) | $ 1,177,125 | $ 1,126,760 | $ 1,107,918 | $ 1,022,865 | $ 998,591 | |||||
Tangible common equity to tangible assets (Non-GAAP) | 8.90 % | 9.02 % | 9.02 % | 6.62 % | 6.94 % | |||||
Adjusted Pre-tax, Pre-provision Net Income (Non-GAAP) | |||||
For the Three Months Ended | |||||
(Dollars in thousands, except per share data) | 3/31/2023 | 12/31/2022 | 3/31/2022 | ||
Net (Loss) Income - GAAP | $ (1,553) | $ 696 | $ 1,524 | ||
Net losses (gains) on sale of securities | 2,370 | - | (13) | ||
Tax effect at 21% | (498) | - | 3 | ||
Merger & system conversion related expenses | 587 | 973 | - | ||
Tax effect at 21% | (123) | (204) | - | ||
Adjusted Net Income (Non-GAAP) | 783 | 1,465 | 1,514 | ||
Income tax (benefit) expense | (376) | 252 | 286 | ||
Provision for credit losses - loans | 293 | 100 | 280 | ||
Tax effect included in Adjusted Net Income | 621 | 204 | (3) | ||
Adjusted Pre-tax, Pre-provision Net Income (Non-GAAP) | $ 1,321 | $ 2,021 | $ 2,077 | ||
Contact:
Nicole Ulmer
Corporate and Investor Relations Officer
717.803.8895
IR@LINKBANCORP.COM
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